Eurozone finance ministers meet today, Monday 16th February, to try and reach an agreement on how to deal with Greek debt. Fred Weston analyses the pressures facing Tsipras and the Syriza-led government: the pressure of the Troika to continue with austerity, on the one hand; and the pressure of the masses opposing further attacks on their living standards, on the other.
Eurozone finance ministers meet today, Monday 16th February, to try and reach an agreement on how to deal with Greek debt. Fred Weston analyses the pressures facing Tsipras and the Syriza-led government: the pressure of the Troika to continue with austerity, on the one hand; and the pressure of the masses opposing further attacks on their living standards, on the other.
Tsipras and his finance minister Varoufakis have toured the European capitals in an attempt to muster support for their debt renegotiation policies but have been met with open hostility. The workers in Greece are rallying around what they regard as their government in a movement that could escalate in the coming weeks.
The victory of Syriza marked a turning point in the Greek and European crisis. The announced implementation of parts of Syriza’s Thessaloniki programme, which represents for the Greek people an end to austerity and the Memoranda, have generated panic in the financial markets and among the strategists of European capitalism.
Tsipras’ stand against the Troika has proven extremely popular among the workers and youth of Greece. Over the past few weeks we have seen rallies and demonstrations in Athens and in many other towns around Greece in support of the government. This is an important element in understanding the conflict between the Greek government and the EU. The Greek masses have been aroused and are an active protagonist in the situation, not mere onlookers.
In fact, what happened last week is symptomatic of the situation. According to different reports, Varoufakis, Greece’s new finance minister, seemed to have reached an agreement, which would have involved “extending” the present loan programme. This would have been seen in Greece as surrender on the part of the government.
The Financial Times claims it had a copy of the draft agreement, which seemed to lean towards a compromise solution with the Greek government. The Greek government subsequently denied any such agreement was being reached, but the Financial Times says, “Our account is based on several sources from multiple delegations, so we stand by our story.”
Pressure of the masses
The problem was that there were around 30,000 people in the square in front of the Parliament building in Athens. Varoufakis, together with Dragassakis, Greece’s deputy prime minister, was far away in Brussels, but Tsipras was in Athens close to the angry protestors. In the end it was the Greek masses that scuppered any attempt at a sellout in Brussels.
Economists from the Berenberg Bank, after yesterday’s failure to reach an agreement, were quoted as saying that: “The real risk in Athens seems to be that Tsipras has raised expectations to such an extent that he could find it extremely difficult to back down from his rhetoric and strike a deal which the rest of the Eurozone could accept.” (Ekathimerini, February 13, 2015)
Negotiations are now to resume today, and Varoufakis is quoted as saying he hopes for a “healing deal”, adding that “not finding a solution is not in our rationale”. This would indicate that there may be some truth in what the Financial Times claimed happened yesterday. If that is so, it would also indicate divisions within the Syriza government on this question, between those who see no other way out than to find some compromise with the EU and those who feel the pressure of the Greek masses, who are not willing to compromise. Thus the only thing that emerged from the Eurogroup’s meeting with Varoufakis, was that the talks will continue today.
The new Greek government has clearly stated the blunt fact that the bailout deals with the EU have damaged the Greek economy. Therefore, in an attempt to reach some kind of deal with the EU, the Syriza government has proposed renegotiating 30% of its bailout obligations. But the Troika has insisted that the brutal austerity measures imposed on the Greek people and agreed by the previous Greek government are not open to renegotiation and must be implemented in full.
Here we are faced with fundamentally irreconcilable interests: those of the Greek working people and those of European finance capital. This is a class conflict which exposes the real nature of the society we live in. Greek workers want decent wages and conditions, decent pensions, a decent healthcare system and education system, food for their families and jobs. This is what they voted for on January 25, defeating all the parties which have implemented austerity and cuts.
The fact is that the capitalist class is incapable of providing all this without eating massively into their accumulated wealth and profits. This is even more the case in this period of global organic crisis of capitalism.
Under the previous Samaras government the Greek people saw an unprecedented collapse in their economy, massive poverty and unemployment, and a constant, endless onslaught of austerity and more austerity.
They fought valiantly in over 30 general strikes and mass demonstrations to stop this, but the previous government moved on inexorably in its offensive against the working class. That is why the Greek workers and youth eventually drew the conclusion that what was required was a political change and voted in big numbers for Syriza in the recent elections.
Syriza won on the basis of an anti-austerity programme. That is why upon taking office the Syriza government immediately came into conflict with the European Commission and European Central Bank.
Thessaloniki Programme
Back in September Alexis Tsipras, leader of Syriza, presented the party’s programme, which became known as the “Thessaloniki Programme”. It has to be said, however, that this platform was more moderate than the 40 points that Syriza stood on in the two elections in 2012. Even so, the Thessaloniki programme contains many progressive demands that, if implemented, would alleviate the suffering of the Greek workers and poor.
It contains such measures as immediately increasing public investment, gradually reversing all the Memorandum injustices, rebuilding the welfare state, writing off the greater part of the public debt’s nominal value, stopping all privatisation of public assets, gradually restoring salaries and pensions, free electricity and meal subsidies for the 300,000 poorest families, a partial write-off of debt incurred by people who are now under the poverty line, the suspension of foreclosures on primary residences valued less than €300,000, restoring the minimum wage to 751 euro with no discrimination for young workers, restoring collective wage negotiations, and many more demands that the electorate enthusiastically voted for.
This is the most left-wing programme we have seen in Europe for many years. It is a genuine programme of reforms. And it is because of such demands that Syriza was able to win the elections. We are told by the mainstream leaders of the labour movement, such as Hollande in France or Miliband in Britain, that so-called “extreme” demands do not win elections. Syriza shows that the opposite is the case. The above listed demands – which are not at all extreme, but modest demands of the workers – would win elections across Europe for the Left if its leaders had the courage to stand on such a programme.
The question now posed is how such a programme is to be carried out, and how is it to be financed? It is clear that the EU financial institutions are not going to provide the necessary level of funding for this programme to be implemented. The dilemma Tsipras is facing is that his programme, although “reasonable” for the workers, is completely incompatible with the interests of the capitalist class both in Greece and in Europe. In other words, the Syriza programme would go a long way to meeting the needs of working people, but this would inevitably be at the expense of the profits of the capitalists.
Lessons in bourgeois democracy
As soon as Tsipras was elected he stated that he intended to carry out the programme he was elected on. One would imagine that the democratic will of the Greek people would be respected by its “European partners”. Surely the majority decides in a democratic system! Instead, he was told that he should put to one side his electoral programme and continue implementing the programme of the parties which were defeated: austerity.
As European Parliament President Martin Schulz said on a recent visit to Greece, “Syriza must realize that it is now the Greek government, not a party running an election campaign.” He also added that he was expecting Syriza to replace its election campaign rhetoric with “pragmatic solutions which can work for both sides.”
Here we have the essence of bourgeois democracy: promise the people whatever you want, but once elected carry out the programme of finance capital. The problem is that this is no normal situation. World capitalism is in a deep crisis and Europe is at the heart of this crisis. That explains why developments in Greece are so important.
Global economy
One of Syriza’s main election campaign demands, the writing off of a large part of Greece’s public debt, was met immediately with an absolute rejection on the part of the EU and ECB. Tsipras has in fact retreated from insisting on such a demand.
As a means of gaining some breathing space for the Greek economy he has called for a “bridging loan” to avoid Greece having to default at the end of this month. Tsipras claims that such a breathing space would allow both sides to negotiate calmly a better deal for Greece. What has to be understood is that even if such a loan were conceded it would only delay the problem for a few months. As far as the overall debt repayment is concerned, he has posed one central demand of the Syriza government in its negotiations with the EU: that Greece’s loan repayments should be linked to the country’s rate of growth, i.e. that only when the Greek economy is growing can it be asked to start making significant repayments.
That would seem a reasonable request, considering the suffering of the Greek people in the recent period. If Greece could achieve significant rates of growth of 4 or 5 per cent over a prolonged period of time, it would eventually be able to start paying. But in the present conditions of the European and world economy, how can Greece achieve the levels of growth required?
Most of Europe is stagnating, Japan is in recession, China’s economy is slowing down and dragging down with it south-east Asia and most of the so-called BRICS, with Brazil stagnating and Russia facing a serious economic crisis. In these conditions, all the industrialised countries are looking for market outlets for their exports, including Germany, which exports around 50% of its GDP.
However, it is not just a question of a stagnating world market. The problem is compounded by the low level of Greek productivity, which is around 30% lower than that in Germany. The reason for this is that German industry has a much higher technological input, due to much higher levels of investment over many years.
Therefore, on a capitalist basis, in order to “export its way out of the crisis”, Greece would have to massively increase its competitiveness. This can be done in two ways: by modernising its industry or cutting workers’ wages.
Modernisation would require massive investments by the capitalists. The problem is that capitalists invest when they feel there is an expanding market for their goods which will allow for a reasonable level of profit to be made in a reasonable amount of time. In the present conditions of the world economy, capitalists are not going to invest in Greece to the levels required. That is why they prefer to increase their competitiveness by cutting workers’ wages and making them work longer hours.
All this explains why the previous governments in Greece had concentrated so much on bringing down real wages and destroying collective bargaining. On a capitalist basis it is perfectly logical to act like this. The Greek workers, however, view this in a very different manner, as it is they who have been on the receiving end, suffering massive losses in their standard of living.
Four million people are now living in poverty (almost half the population). One third of children suffer some form of malnutrition; 400,000 households are without income; and one third of workers live on less than €470 per month. At the same time, the richest 10% of Greeks have actually increased their wealth in the same period.
European tour
The last few weeks have seen Tsipras, the new premier, and his finance minister Varoufakis do a tour of Europe, meeting European national leaders, in an attempt to muster support for their proposals. In general, they have received a cold shoulder, with many polite – and not so polite – words, but no concrete steps towards meeting the real needs of the Greek people.
The German government, reflecting the needs of their own ruling class, have put up a hard-line position demanding that Greece stick to the agreed Memoranda. That is because the German capitalist class – while wishing to preserve the wider European market for its exports – does not want to foot the bill for the debt accumulated by Greece and the other South European EU member states.
In this we have an irreconcilable conflict. The German bourgeois have imposed austerity across the Eurozone. They are demanding that each country pays its debts. In order for that to happen, all national governments are forced to cut back massively on social spending in order to balance their annual budgets and find the money to pay the interest on their accumulated debt.
The problem is that the imposition of austerity means cutting people’s living standards, as they lose their jobs or suffer cuts in real wages. This in turn leads to a cut in the market and therefore falling sales. It is a downward spiral that offers no solution. All it achieves is a constant flow of capital out of these countries and back to the lenders, who keep demanding more as they are not prepared to give up on what is owed to them.
Merkel is also faced with a political problem. Any hint that she is “soft” on Greece and that therefore German taxpayers will have to foot the bill will increase support for parties to her right, like the AfD [the Alternative for Germany].
Militant stance
Before Syriza was elected, all European governments were sticking to the agenda of austerity dictated by Germany, with the enthusiastic support of Holland and Finland. In Greece, however, the people have now voted for an end to austerity and they expect Tsipras to deliver. That explains the militant stance adopted by the Syriza government.
Last week, in a fiery speech to his parliamentary group Tsipras said, “Greece won’t take orders any more… Greece is no longer the miserable partner who listens to lectures to do its homework. Greece has its own voice”. And immediately Tsipras’ popularity ratings shot up to above 70%, up from the previous week, with 72% of the population expressing support for his confrontation with the Troika. Were Tsipras to call new elections now he would get a landslide victory, as people see him as trying to carry out what he promised in the election campaign.
The strategists of capital across Europe are now alarmed. If they take the confrontation to the very edge, Greece could end up being forced out of the euro and possibly even the EU itself. Although the Greek economy is small – only 2% of Eurozone GDP – the implications of its exit, and inevitable default, would go far beyond its borders. It would destabilise the euro as a whole, preparing the ground for an even bigger crisis, involving countries like Italy and Spain.
The Eurozone is already facing deflationary pressures. The strategists of capital fear that if deflation grips the European economy it would be the beginning of a downward spiral that they would find difficult to climb out of. That explains the recent decision of the ECB to adopt quantitative easing, the printing of money, in a desperate attempt to stop the economy falling into a depression. Crisis in Europe would put an end to the feeble recovery in other parts of the world, in particular North America.
This explains why Obama and the Canadian premier have been putting pressure on EU officials to find some kind of compromise with Greece. They fear that an unravelling of the Greek crisis could have serious repercussions for the world economy at a time when growth is so fragile.
The problem the EU officials are facing is that any significant concession to Greece would be seen as a green light to Portugal, Spain, Italy and other member states, to call for concessions. In Spain we have seen the meteoric rise of the anti-austerity party Podemos. Any serious concessions to the Syriza government would strengthen Podemos, who could win the next general election in Spain.
If Greece is allowed by the Troika to pursue a programme of restoring the minimum wage, banning home repossessions, re-hiring civil servants, etc., the impact on public opinion in these countries would be enormous. People would rightly ask, if Greece can stop austerity, why can we not do it? And the obvious answer would be: we need to get rid of ruling right-wing parties implementing austerity and elect a Syriza-type government.
An Irish government minister has already declared that any new deal given to Greece would have to also apply to Ireland. If it were to make significant concessions to Greece, the Troika would then be dealing with a far more serious problem across Europe!
No long term compromise possible
In the past couple of weeks Tsipras and Varoufakis have made a number of contradictory statements, which reflect the different class pressures they are coming under. Varoufakis has stated that the Syriza-led accepts 70% of what was agreed with the Samaras government, adding also that deals with reactionary forces are “sometimes necessary”.
Tsipras has said that Greece intends to meet its commitments and wishes to stay within the euro and EU. Even before the elections, Tsipras wrote an article for the Financial Times, in which he stated that: “A Syriza government will respect Greece’s obligation, as a Eurozone member, to maintain a balanced budget, and will commit to quantitative targets.”
That is like squaring the circle. If Greece remains within the EU and Eurozone it will be forced to abide by the dictates of European capital.
Greece’s overall debt stands at €321 billion and it has already borrowed €240 billion from the EU, the ECB and the IMF (the infamous Troika). Since the crisis began its public debt has gone up from 125% of GDP to close to 180%. In the same period GDP has fallen by a total of 25%. In order to pay off this debt Greece needs very high levels of growth for many years to come, which are unachievable any time in the foreseeable future.
Faced with the wider European and global consequences of a Greek default, some temporary compromise may be possible in the coming days. Today we will see what agreement is possible, if any. A 10 point proposal is being drawn up by Syriza, which would include a reduction in the primary budget surplus target for 2015 from 3 percent to 1.5 percent. In return for a compromise proposal, the Syriza-led government is hoping to receive the remaining €7 billion of the bailout package from the EU.
This would cover the government’s commitments until June. Thus, even in the best case scenario, this would only delay the inevitable for a few months. Any short term compromise, in the form of a loan, would only provide a short breathing space in which the negotiations would be dragged out with both sides unable to reach an overall compromise.
A short term compromise and some concessions from the EU are not ruled out. Last week’s news was that the European Central Bank has extended a further €5billion in emergency loans to Greece’s banks, taking the total they have received so far in Emergency Liquidity Assistance to €65billion. This would indicate that they do not wish to see a banking crisis unravel in Greece. The problem, however, is that money is being withdrawn from Greek banks at a rate of €200 to €300 million a day. If no deal is reached today, the fear is that such withdrawals could increase sharply, with a massive run on the banks.
This shows how big the crisis is, and even if short-term temporary stop-gap measures were agreed to, they would not solve the fundamental problem. The truth is that Greece’s debt is unpayable and no amount of manoeuvring can escape from that.
The lenders will not be prepared to give up on the debts owed to them. They have already accepted so-called “haircuts” in the past. Therefore, so long as Greece is within the EU and the euro it will come under unbearable pressure to find the resources to pay the debt and the interest on that debt. That means more austerity, not less.
Determination of Greek workers
The people of Greece, however, voted for an end to austerity and will not be prepared to suffer any more cuts in their living standards. This was shown in the last couple of weeks, with tens of thousands turning out in front of the parliament to support the government. The masses are not going to sit idly by. They are going to actively support what they perceive as their government.
The election of Syriza and, above all, the way in which Tsipras is perceived as standing firm on its election commitments, have transformed the mood in Greece. There is a growing feeling of confidence. Some of the measures announced have a powerful symbolic impact, like the rehiring of the Ministry of Finance cleaners who had waged a heroic struggle to defend their jobs, and the re-establishment of state broadcaster ERT, whose workers occupied the premises when it was shut by the previous government, etc.
The provocative statements and decisions taken by officials of the EU, the ECB, the European Commission, etc., have generated a justified sense of anger in Greece.
This mood needs to be transformed into an organised movement. In every neighbourhood and workplace there should be united committees of action against austerity and against the blackmail of the Troika. The working people must mobilise to make sure the government does not make any concessions to the Troika and demand the full implementation of its programme, as Tsipras has correctly announced.
In these battles, the Greek workers can only trust their own forces and those of their class brothers and sisters in the rest of Europe. No amount of clever negotiation tricks or semantic manoeuvring can obscure the basic fact that Syriza’s election demands are in complete contradiction with the Troika-imposed Memorandum of austerity and cuts.
At the same time, every announcement by Syriza ministers that they would implement their programme has been met with a de facto declaration of war on the part of the capitalists. As we have seen, there has in fact been a slow motion run on the banks going on ever since the new elections were announced in December. In January alone, €11billion euros was withdrawn from the banks.
The stock exchange has experienced violent swings on a daily basis responding to perceptions of whether the government seemed to be making concessions to the Troika or standing firm. Overall, since the elections were announced, it has lost 20% of its value, led by banking shares. This proves that even beyond the negotiations in Brussels, the room for manoeuvre for this government is extremely small.
The International Marxist Tendency stands in solidarity with the Greek people against the wolves of the EU, the ECB and IMF. What we say to Tsipras is “carry out the Thessaloniki programme.”
However, we also explain that to carry out that programme, the resources to finance it have to be found. You cannot count on the EU to supply the necessary funding. Any cash it provides will come with strings attached. But the wealth is there: it is in the hands of the oligarchs, of the capitalist class, which has more than enough to pay for all the social needs of the people. At the same time there is an urgent need to counter the warfare being waged by the capitalists in the form of a massive flight of capital.
That is why the Thessaloniki programme can only be carried out by expropriating the big corporations and capitalist interests. Once the Syriza government has this wealth in its hands it can finance all the reforms it has promised.
International solidarity
The workers of Greece are not alone in their struggle. The eyes of the European working class are on Greece. The workers of Europe long for an end to austerity. They instinctively sympathise with the stance being taken by the leaders of Syriza. In Spain there is already the new phenomenon of Podemos. If Greece shows that austerity can be stopped it would have a huge echo across Europe.
Back in 2012, Karatzaferis, a Greek right-wing bourgeois politician, stated that the policies imposed on Greece by Merkel would prepare the first stage of the “European revolution”, adding that “Greece will set alight the fire of the European revolution.”
Those words are even truer today. Syriza’s leadership has two options before it. One is to play the game of brinkmanship, hold out as long as possible and then buckle under the pressure of the EU, retreat from its demands and abide by the austerity measures demanded of it by the European bourgeoisie. If it does this, it will disappoint the masses who voted for it, opening up a future scenario where right-wing reactionary forces can make a comeback.
The other option is to use the negotiations to expose the nature of the EU in the eyes of the Greek masses and then to proceed to carry out the programme fully. This would require cancelling the foreign debt and nationalising the banks and main corporations of Greece. This would not “isolate” Greece at all, but would transform it into a beacon for the masses of Europe, an example to be followed.
Published on In Defence of Marxism
